CEE MARKETS-Zloty jumps on stop-loss deals, helped by strong economy

Reuters Staff

6 Min Read

* Zloty sails through 4.2 vs euro boosted by stop-loss deals
* Recent robust economic figures continue to buoy zloty
* Hungarian bonds retreat, foreigners' holding drops
By Sandor Peto and Bartosz Chmielewski
BUDAPEST/WARSAW, Nov 29 (Reuters) - The zloty jumped to a
5-1/2 month high against the euro on Wednesday, boosted by
stop-loss deals at the key 4.2 level, while Central European
asset prices were mixed.
The zloty, which along with the Czech crown, is the top
performing currency in the world this year, has been
appreciating for weeks.
Poland's recent industrial output, wage and retail sales
figures have fuelled expectations that robust growth could tip
the balance in the central bank and lead it to hike interest
rates next year.
In early trade, the zloty rallied to 4.186. By
1002 GMT it retreated to 4.199, still up 0.15 percent.
"The chart suggest that the way to 4.16 is open," said BZ
WBK chief dealer Mateusz Bieniek, adding that fundamentals
backed the zloty, political risks were limited, and a dollar
firming could hurt it only if it is sudden.
"Moreover, over the last 20 years, December has usually been
good for the zloty," he said.
The index of Warsaw-listed bank stocks set a new
2-and-1/2-year high.
Economic growth is strong across the region, but inflation
is not a concern everywhere.
The Czech central bank has raised its interest rates twice
since August to fight inflation. Expectations for further hikes
keep the crown near 4-1/2 year highs against the euro.
It firmed 0.1 percent to 25.47 on Wednesday and most
analysts expect further gains.
Czech markets usually ignore politics. Election winner ANO's
party leader Andrej Babis said on Tuesday he expected his
minority cabinet to take power on Dec. 13.
In Romania, concerns over judiciary reform, corruption and
tension between the government and the central bank remain in
the limelight, on top of worry over rising inflation.
The bank has requested a meeting with Prime Minister Mihai
Tudose, just days after he criticized the bank for letting the
leu weaken to record lows.
The currency eased a shade on Wednesday, just like the
forint which traded at 311.30.
The latter is off seven-month lows touched a week ago when
the National Bank of Hungary announced new programmes to push
long-term interest rates lower.
The announcement boosted demand at a Hungarian bond auction
last Thursday, also helping the forint.
The latest government figures, however, showed that foreign
investors did not take part in the rally. Their Hungarian bond
holding actually dropped as yields were falling to
record lows.
Hungarian yields rose 2-5 basis points on Wednesday,
steepening the curve. Ten-year papers traded at 2.12 percent, 22
basis points below U.S. Treasuries.
CEE MARKETS SNAPSHOT AT
1102 CET
CURRENCIES
Latest Previous Daily Change
bid close change in 2017
Czech crown 25.4700 25.4910 +0.08% 6.03%
Hungary 311.3000 311.1350 -0.05% -0.80%
forint
Polish zloty 4.1990 4.2051 +0.15% 4.88%
Romanian leu 4.6419 4.6408 -0.02% -2.30%
Croatian 7.5450 7.5325 -0.17% 0.13%
kuna
Serbian 119.3300 119.6450 +0.26% 3.37%
dinar
Note: daily calculated previous close at 1800 CET
change from
STOCKS
Latest Previous Daily Change
close change in 2017
Prague 1056.41 1053.85 +0.24% +14.63%
Budapest 39020.97 39242.18 -0.56% +21.93%
Warsaw 2473.42 2485.71 -0.49% +26.98%
Bucharest 7810.27 7802.62 +0.10% +10.24%
Ljubljana 779.80 780.54 -0.09% +8.67%
Zagreb 1870.06 1865.47 +0.25% -6.26%
Belgrade 735.41 739.42 -0.54% +2.51%
Sofia 667.58 667.39 +0.03% +13.84%
BONDS
Yield Yield Spread Daily
(bid) change vs Bund change in
Czech spread
Republic
2-year 0.26 0 +094bps -1bps
5-year 0.904 0.039 +122bps +1bps
10-year 1.642 -0.117 +128bps -14bps
Poland
2-year 1.555 0.006 +224bps -1bps
5-year 2.619 0.081 +293bps +6bps
10-year 3.321 0.002 +296bps -2bps
FORWARD RATE AGREEMENT
3x6 6x9 9x12 3M interbank
Czech Rep <PR 1.03 1.21 1.35 0
IBOR=>
Hungary <BU 0.08 0.095 0.14 0.03
BOR=>
Poland <WI 1.773 1.83 1.93 1.73
BOR=>
Note: FRA are for ask
quotes prices
**************************************************************
(Additional reporting by Luiza Ilie in Bucharest; Editing by
Elaine Hardcastle)